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3 Top Dividend GrowthStocks to Buy

Image source: Cisco.

Activision Blizzard is one of the few video game publishers that pays a dividend, and, while its current yield might not look like much, there’s a good chance the company will deliver reliable payout increases down the line.

Image source: Activision Blizzard.

Activision Blizzard

Activision Blizzard dividend profile and valuation

Yield Years of

Dividend

Growth

Payout

Ratio

Dividend

Growth

over Last

5 Years

Free

Cash

Flow

(TTM)

0.5% 6 16.5% 58% $2.1

billion

Activision Blizzard might appear pricey trading at roughly 30 times forward earnings projections, but the strength of its properties and a favorable outlook for the video games industry suggests it can still be a big winner for investors.

With hit franchises including Overwatch, World of Warcraft, and Call of Duty, Activision Blizzard is backed by a nearly unmatched stable of video game brands. It’s also got a great track record of creating new hit properties.

Image source: Activision Blizzard.

The company looks to have continued earnings momentum thanks to growth in high-margin digitally-delivered content, an expanding market for video games, and its push into merchandise sales --paving the way for big dividend growth.

Image source: Activision Blizzard.

Nike

When it comes to brand strength, there aren’t many companies that can match Nike. The footwear and apparel leader has been leading its industry for decades and has a variety of characteristics that make it a smart portfolio addition.

Image source: Nike.

Nike dividend profile and valuation

Yield Years of

Dividend

Growth

Payout

Ratio

Dividend

Growth

over Last

5 Years

Free

Cash

Flow

(TTM)

1.2% 15 30% 100% $2.5

billion

Nike has a forward P/E of roughly 24, which might look expensive, but the company still has significant growth potential thanks to cost cutting initiatives, international expansion, and online selling.

The company already has a stellar dividend growth history, and has raised its payout at an average annual rate of 15.6% over the last five years and 14.7% over the last decade. With its low payout ratio, Nike has plenty of room to continue delivering big payout boosts.

Image source: Nike.

Nike’s stellar profitability gives it a long runway for dividend growth. Last fiscal year saw it record a gross margin of more than 44%.

Image source: Nike.

Disney’s stable of classic characters and film properties is unrivaled in the entertainment industry, and the synergies that exist between its film, theme park, media networks, and consumer products segments make it a great stock to own for the long haul.

Image source: Disney.

Disney

Disney dividend profile and valuation

Yield Years of

Dividend

Growth

Payout

Ratio

Dividend

Growth

over Last

5 Years

Free

Cash

Flow

(TTM)

1.5% 2 26.4% 108% $7.8

billion

Disney looks cheap valued at roughly 17 times forward earnings estimates, and its dividend growth story is actually better than it looks on paper.

The company distributed a one-time payout bonus when it switched from an annual to a semi-annual payout in 2014, making for an unfavorable comparison in 2015, but Disney has boosted its payout in every other year since 2010.

Image source: Disney.

Disney is a company at the top of its class, and its stock presents a rare combination of value, growth potential, and returned income that makes it a great buy.

Image source: Disney.

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